There are many, many secrets to banking. If you can learn them and understand them, the better off you will be. Today I will be talking about banks’ posting processes and funds availability.

Ultimately, if you have a checking account, you are going to experience what is called “posting”. Posting is basically when the bank’s proof department tallies up the credits and debits and applies them to that particular account. Many banks delay funds availability from checks that were deposited on the same day to credit debits that are posting at the same time.

For example, I make a $500 deposit with a check that is written off a bank that is not my bank. I go out and use my check card that day to purchase an item for $200 at a store. That night at posting I receive an overdraft fee because that money was not “collected” by my bank.

Tricky, right? That is why I urge you to go to your bank and ask them how the funds availability works. Normally someone would be happy to sit down with you and explain how things work.

Also, many banks will process transactions in order of amount. Many banks will post the largest items to smallest items. Their reasoning is that the larger items are more important to post.

If I have $400 in my checking account and I have written a check for $350, I have two items that I’ve used my check card for that are $60 each the bank may post that check the check first. In turn, I will receive two overdraft charges for the items that I used the check card for. $400-$350= $50, $50-$60= $-10, and then $-10-$60= $-70 plus two overdraft charges. Whereas, if they posted them in the order they were spent I may have only received one overdraft charge. $400-$60=$340. $340-$60=$280. $280-350=$-70 but only one overdraft charge.

Some small banks may handle funds availability and posting differently than larger banks. It all depends on your bank’s particular policies. Banking can be a very confusing subject and take a few months to fully grasp how to handle your account correctly. Unfortunately, banking mistakes are usually the most costly ones. Next time you stop by your bank, make sure to pick up and account agreement and a pricing schedule so that you can make sure you fully understand how your account works.

Posted under Bank Secrets